St. Paul Travelers Companies Inc. on Wednesday reported income from continuing operations of $877 million for the quarter ended March 31, 2005, or $1.31 per basic share and $1.25 per diluted share, compared to $587 million, or $1.35 per basic share and $1.31 per diluted share, in the prior year quarter.
The current quarter GAAP combined ratio was 90.5 percent, 1.4 points lower than in the prior year quarter. Net income for the current quarter was $212 million, or $0.31 per basic share and diluted share, compared to $587 million, or $1.35 per basic share and $1.31 per diluted share, in the prior year quarter. Net income for the current quarter included a $665 million after-tax loss from discontinued operations, which consisted of the $687 million tax charge previously disclosed March 30, related to the company’s disposition of its equity stake in Nuveen Investments Inc. (“Nuveen”), partially offset by the company’s share of Nuveen’s net income for the quarter.
Operating income for the current quarter was $859 million, or $1.28 per basic share and $1.23 per diluted share, compared to $614 million, or $1.41 per basic share and $1.37 per diluted share, in the prior year quarter.
Operating return on equity of 16.7 percent (excluding FAS 115).
GAAP combined ratio of 90.5 percent, 1.4 points lower than in the prior year quarter.
* The Commercial and Specialty segments recorded operating income of $433 million and $188 million and combined ratios of 94.9 percent and 95.6 percent, respectively.
* The Personal segment recorded operating income of $285 million and a combined ratio of 78.7 percent.
* Favorable prior year reserve development of $78 million after-tax in the Personal segment due to continued favorable claim performance in both the Auto and the Homeowners and Other lines.
* Total catastrophe losses of $58 million after-tax in the Specialty and Personal segments, of which $38 million resulted from adverse loss development related to the third quarter 2004 hurricanes and $20 million resulted from floods in the U.K. and hailstorms in Texas that occurred in the current quarter.
* Gross written premiums of $5.921 billion, up 47 percent from the prior year quarter and down 3 percent on a pro forma combined basis, excluding the runoff businesses categorized as Commercial Other.
On April 6, the secondary offering and related transactions for the sale of the company’s equity investment in Nuveen were priced. The company has received approximately $1.8 billion of cash to date and expects to receive an additional $400 million upon closing of the forward share repurchase contract with Nuveen, expected to occur in the third quarter of this year.
Total after-tax cash proceeds, excluding 3.9 million shares associated with the underwriters’ overallotment option, are estimated to be $2.0 billion, after utilization of the company’s remaining net operating loss carryforward of approximately $1.6 billion.
Jay Fishman, president and CEO, noted, “We are off to an excellent start, with all our business segments generating very strong operating income in the quarter. With our fundamental earnings power emerging, we believe that we are well positioned to generate attractive returns for our investors while having adequate resources to make the investments necessary to provide for future profitable growth.
“Retention levels are very strong and operating margins are very attractive, as loss indications remain at low levels and renewal price changes for our company stay modestly positive. While we actively seek opportunities for new business, we will not compromise our underwriting discipline and will add volume only when pricing meets our return hurdles.
“We are excited about the franchise that we have created and all of the competitive advantages and opportunities that it provides us in the marketplace.”